Filed under: Deals, Good news, Industry, AT and T (T), Options, Technical Analysis

DirecTV (NYSE: DTV - option chain) shares are basically flat today, but with today’s market that is great performance. The company announced a deal Friday after the close that DTV and AT&T Inc. (NYSE: T) will launch a co-branded satellite TV service that will be available to AT&T customers beginning after T’s current deal with Dish Network (NASDAQ: DISH) expires early next year. Terms of the deal were not disclosed, but this is a large move for the smaller company and DISH is down more than 13% currently. If you think that the stock won’t fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on DTV.

DTV opened this morning at $26.05. So far this day the stock has hit a low of $26.05 and a high of $27.30. As of 12:25, DTV is trading at $26.54, down one cent (-0.04%). The chart for DTV looks neutral and S&P gives DTV a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider an November bull-put credit spread below the $22.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in just eight weeks as long as DTV is above $22.50 at November expiration. Direct Television would have to fall by more than 14% before we would begin to lose money. Learn more about this type of trade here.

DTV hasn’t been below $22.50 since February and has shown support around $24.50 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that might include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in DTV nor DISH, but he does control a bullish hedged position on T.

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Filed under: Deals, Ford Motor (F), General Motors (GM), Recession, Financial Crisis

With General Motors (NYSE: GM), Ford (NYSE: F), Chrysler and the rest of the Detroit auto industry looking prone to get a massive chunk of the $25 billion in taxpayer-funded loans they need to remain viable, there’s another group that needs more credit for the industry to turn itself around: consumers.

Light-vehicles sales are expected to have fallen 26% year-over-year for September and Goldman Sachs auto analyst Patrick Archambault told clients in a note that “Decreased credit availability [is] constraining sales even at prime levels of credit quality.”

The industry will get the loans it needs to build new cars, but unless consumers can get the loans they need to buy them, the big three are still in trouble. Add that to historically high gas prices and a generally weak economy and it’s hard to see any reason for near-term optimism for the industry. Longer-term, of course, lower-cost overseas producers of superior cars will continue to eat Detroit’s lunch.

I’ll make a not so bold prediction: with liabilities far exceeding its assets and an inability to turn a profit, General Motors will be bankrupt, merged, or otherwise irrelevant within the next five years.

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